Don’t Have Health Insurance? What’s the Worst That Could Happen?

While the number of uninsured Americans has dropped, many people still don’t have any type of healthcare insurance coverage. The passage of the Affordable Care Act (ACA) allows millions to choose a government-subsidized healthcare plan. However, many consumers are ineligible for subsidies, and many of those who qualify have chosen not to participate.  

In addition, employees with company-sponsored health plans are feeling the financial crunch as employers change their benefit programs. According to a report from Aon, 2015 marks the lowest health care cost increases in almost 20 years. However, the report reveals that workers are contributing 134% more than they did a decade ago. The average U.S. worker pays $2,490 in premiums, and $2,208 in deductibles, co-pays, and other out-of-pocket costs.

So how many Americans are uninsured? The Kaiser Family Foundation puts the number of uninsured adults (between the ages of 19 and 64) at 32 million. When asked to describe the main reason for being uninsured, their responses were as follows:

48% - Cost

12% - Unemployed/work doesn’t offer/not eligible at work

12% - Other reason

  7% - Immigration status

  6% - Told they were ineligible

  6% - Feel they don’t need it

  4% - Don’t know/refused to answer

  3% - Opposed to ACA/Prefer to pay the penalty

  3% - Don’t know how to get it

 A recent survey by ionTuition of college students, recent college graduates, and those planning on attending college were asked which employee benefit was most important. Over half of the respondents (55%) said they would prefer a student loan match to health care benefits. Because of the respondents’ age group, these Millennials may feel a youthful level of invincibility.

However, below are the three most significant potential risks of not having health insurance.

Contrary to popular belief, health providers are not required by law to provide medical services to individuals without insurance. Only emergency departments are legally bound to provide care.

The Transamerica Center for Health Studies recently released a report revealing that 62% of Americans have been diagnosed with a chronic health condition, such as high blood pressure, high cholesterol, or being overweight or obese. The study also found that only 41% of uninsured Americans could afford to pay for their routine health expenses.

Transamerica’s executive director, Hector De La Torre, tells Investopedia that the ACA requires many preventive services to be covered by insurance policies with no co-pay. However, he says, “Not having health coverage can keep people from accessing free preventive care.”

De La Torre explains that preventive care is crucial to spotting illness or conditions early before they can develop into full-blown critical problems. Catching health problems early increases the probability of successful treatment and also reduces the health care costs for treatment.

Without health insurance coverage, a serious accident or a health issue that results in emergency care and/or an expensive treatment plan can result in poor credit or even bankruptcy. Dylan Roby, assistant professor of Health Services Administration at the University of Maryland School of Public Health, tells Investopedia, “A cancer diagnosis, car accident, or even a broken leg can cost thousands of dollars out-of-pocket.”

Roby adds, “Insurance coverage now has out of pocket maximums that protect you from more than $6,600 (individual) or $13,200 (family) in spending.” But there are no limits for the uninsured.

And as a result, for several years, medical debt has been the number one cause of personal bankruptcy, according to De La Torre. Even when medical debt doesn’t end in bankruptcy, it takes a toll on consumers. Among third-party debt collection activities, Ernst & Young reports that medical debt accounts for 38%, which is 13% more than student loan debt, and more than twice the percentage of credit card debt. Also, consumers with massive medical debt are less likely to be able to save money and more susceptible to the type of financial strain that leads to foregoing necessities and borrowing money, according to the Kaiser Family Foundation. 

Even if you remain relatively healthy, you’ll have to pay for not having health insurance. According to De La Torre, “If someone does not have health coverage in 2016, the tax penalty for not having insurance will be $695 per adult and $347.50 per child under 18 up to a maximum of $2,085 for a family or 2.5% of household income, whichever is higher.

Depending on the income level, Roby says some consumers will pay thousands of dollars for being uninsured. He recommends trying to qualify for any available programs, including Medicaid and tax credits in health insurance exchanges. “If not, you may have to pay a price almost as high as a health insurance premium on your tax return due to the increased penalty for 2016,” Roby concludes.

Healthcare is expensive—even with insurance. However, those who don’t have insurance coverage will be at a much greater disadvantage. The inability to seek treatment for health conditions, the crushing weight of medical bills, and the substantial tax penalty for being uninsured are three good reasons to obtain coverage.